Alternatively Secured Pension – ASP

Following the changes to pensions effective from 6 April 2006, an entirely new option has become available for anyone not wishing to buy an annuity even after the age of 75.

Known as an alternatively secured pensions or ASP, this type of scheme is similar to an income draw-down (now referred to as an unsecured pension) and may be suitable for those with large pension funds who do not necessarily want to take income and may wish to leave funds to their dependent.

ASPs

An ASP differs from an annuity in that income may be taken while the remaining fund continues to be invested, allowing some control over its growth, as with a draw down policy.

The income can be between 0% and 70% of that available under an annuity so while income levels are flexible, they are also lower.

This type of plan carries more risk than many other more straightforward annuities however, in the event of death the remaining fund can be left to dependent whereas with an annuity, the fund is appropriated by the insurance company. The chancellor announced in his 2006 budget however that there could be an Inheritance Tax liability on death.

There are pros and cons with any type of pension and the right choice for any individual can depend on their age, health and financial circumstances. It is essential that professional financial advice is sought when considering taking retirement benefits as making the right decision will affect income for life and possibly that of any dependants that may be left after death.

Our independent experts can help you to make the right decision and understand the implications of the recent changes to pensions. To talk to an adviser about your situation, please complete our Quick Enquiry Form and we will arrange for you to be contacted.

How do I find out more about annuities?

Please click here to read the PensionForecast.com guide to pension annuities.

Because some of the terms relating to this product are confusing, please also visit our glossary of terms for a full explanation of the jargon.